HomeMy WebLinkAbout06-07-2021 Ogden murphy email_ TracFone v. Renton_ Tax administration rules adopted under RMC 5-26-20CAUTION: This email originated from outside the City of Renton. Do not click links, reply or open
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From:Kari L. Sand
To:Phil Olbrechts; Edwards, Scott M.
Cc:Cynthia Moya; Degginger, Grant
Subject:RE: TracFone v. Renton: Tax administration rules adopted under RMC 5-26-20
Date:Monday, June 07, 2021 11:44:40 AM
Examiner Olbrechts and everyone:
The City would like to weigh in on the questions raised below about refund interest (also, see quick
answers in green font below).
1. Line 27 column A should be through 12/31/2019, not 12/21. The reason it is blank is due to
the provisions in RCW 82.32.060, which state that refund interest will begin calculation from
the last date of the month following the date of payment in full. In this case, tax was paid
under protest pending this appeal in November 2019, so interest would not start until the end
of December 2019, and thus, no interest is due for this period.
2. For the no retail margin spreadsheet, the interest is calculated only on the difference of
63,322.06, and not on the entire 154,578.06, as the prior amount refunded was removed
from the interest calculation. The refund interest on the $91,256 was already paid in full with
the first refund issued by the City.
Sincerely,
Kari L. Sand | Attorney
Ogden Murphy Wallace P.L.L.C.
901 Fifth Avenue, Suite 3500 Seattle, WA 98164
Direct: 206.447.2250 | Fax: 206.447.0215
ksand@omwlaw.com | www.omwlaw.com
Take a look at Ogden Murphy Wallace’s new website!
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From: Phil Olbrechts <olbrechtslaw@gmail.com>
Sent: Monday, June 7, 2021 9:54 AM
To: Edwards, Scott M. <EdwardsS@lanepowell.com>
Cc: Kari L. Sand <ksand@omwlaw.com>; Cynthia Moya <CMoya@rentonwa.gov>; Degginger, Grant
<DeggingerG@lanepowell.com>
Subject: Re: TracFone v. Renton: Tax administration rules adopted under RMC 5-26-20
Thank you Mr. Edwards. A few quick questions on the refund interest:
1. In line 27, Column A on the no retail margin spreadsheet, the first interest period ends at
12/21/19. Should this be 12/31/19? Yes. Also, the amount for this period is blank in both
spreadsheets. See above explanation. Do you have that figure or was it too de minimum for
inclusion?
2. Using the no retail margin spreadsheet as an example, was the timing of the 91k refund already
paid by the City a factor in computing refund interest? Yes. It appears to me that refund interest was
to be computed for the $154,578 amount until the 91k refund was paid on May 15, 2021 and then
subsequently refund interest would be based upon the $63,322.06 figure. Correct.
On Mon, Jun 7, 2021 at 8:01 AM Edwards, Scott M. <EdwardsS@lanepowell.com> wrote:
Examiner Olbrechts,
The parties have conferred and agree:
1. If the Hearing Examiner rules that a retail margin adjustment is appropriate, the
additional refund due is $80,077.38 plus $6.27 per day from May 28 to the date of
payment.
2. If the Hearing Examiner rules that no retail margin adjustment should be made, the
additional refund due is $66,513.50 plus $5.20 per day from May 28 to the date of
payment.
Schedules reflecting both computations are attached. The file named TracFone Calculation
of Renton Refund Due – 2019 Interest Rate Corrected 2021-06-04.xls reflects the
computations under no. 1 above while the file named TracFone Calculation of Renton
Refund Due – RCW interest and penalties only.xls reflects the computations under no. 2
above.
SCOTT M. EDWARDS
Shareholder Bio | vCard
edwardss@lanepowell.com
D 206.223.7010 C 206.529.7030
LANEPOWELL.COM
From: Phil Olbrechts <olbrechtslaw@gmail.com>
Sent: Thursday, June 3, 2021 2:50 PM
To: Kari L. Sand <ksand@omwlaw.com>
Cc: Cynthia Moya <CMoya@rentonwa.gov>; Edwards, Scott M. <EdwardsS@LanePowell.com>;
Degginger, Grant <DeggingerG@LanePowell.com>
Subject: Re: TracFone v. Renton: Tax administration rules adopted under RMC 5-26-20
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Thank you Ms. Sand. Your reference to the last whereas clause in Ordinance 5756 was very
helpful in resolving the conflict. Does Tracfone agree with the City's position? If so, can the
parties take a stab at agreeing upon the interest and penalty due under the City's new position? I
already have Tracfone's interest computation under their retail margin deduction position.
On Thu, Jun 3, 2021 at 2:26 PM Kari L. Sand <ksand@omwlaw.com> wrote:
Good afternoon, Examiner Olbrechts and TracFone counsel:
Having conferred with Renton Tax & License Manager Nate Malone, I can confirm that the City
of Renton has not adopted any administrative tax rules under RMC 5-26-20 to date, nor has
Renton adopted any formal administrative interpretations of the City's tax regulations,
particularly with regard to the computation of interest due on late tax payments.
You are correct that a conflict exists between RMC 5-11-2(B), which imposed 12% yearly late
payment interest for utility tax until November, 2019 when it was repealed by Ordinance No.
5944, and RMC 5-26-11(A), which imposed a much lower late payment interest rate consistent
with RCW 82.32.050 for utility taxes, starting on January 1, 2016. This conflict in the RMC
interest provisions was unintended, and as best as can be discerned now upon greater scrutiny,
the City’s intent was to administer the tax codes consistently (see last “whereas” recital of
Ordinance No. 5756) and to repeal any conflicting provisions, such as RMC 5-11-2(B), upon the
passage of Ordinance No. 5756, passed 5-18-15 and effective 1-1-2016. Ordinance No. 5756
established a new Chapter 26, entitled “Tax Administrative Code,” of Title V (Finance and
Business Regulations), of the Renton Municipal Code, providing administrative processes for
administering City tax codes. The later repeal of RMC 5-11-2(B) by Ordinance No. 5944 appears
to be “housekeeping” to clean up the code and eliminate the conflict between the two interest
provisions.
The unintended code conflict and careful review of Group Health Co-op. v. City of Seattle, 146
Wash. App. 180, 102-03, 189 P.3d 216 (2008), has prompted the City of Renton to change its
position on the application of the statutes for the computation of interest and penalties from
that taken at the hearing last week on May 27, 2021. Resolving the conflict in the RMC on the
computation of interest, it appears the intend was that RMC 5-26-11(A) applied at the time of
the City of Renton’s October 17, 2019 Final Assessment Affirming the City’s February 14, 2019
Telephone Utility Tax Assessment, and based on the Group Health case, interest should be
computed on late utility tax payments consistent with RCW 82.32.050 for the entire audit
period. Likewise, the penalty must also be computed consistent with RCW 82.32.090(1) and (2)
and would increase from 25% (under the former RMC 5-11-2(A)) to 34% (29% + 5% for
“substantially underpaid” taxes).
I trust the foregoing answers your questions. Please let me know if you have any additional
questions or require additional information.
Sincerely,
Kari L. Sand | Attorney
Ogden Murphy Wallace P.L.L.C.
901 Fifth Avenue, Suite 3500 Seattle, WA 98164
Direct: 206.447.2250 | Fax: 206.447.0215
ksand@omwlaw.com | www.omwlaw.com
Take a look at Ogden Murphy Wallace’s new website!
CONFIDENTIAL COMMUNICATION - This communication constitutes an electronic communication within the meaning of the Electronic
Communications
Privacy Act, 18 U.S.C. Section 2510, and its disclosure is strictly limited to the recipient intended by the sender. It may contain information that is
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From: Phil Olbrechts <olbrechtslaw@gmail.com>
Sent: Tuesday, June 1, 2021 9:48 PM
To: Kari L. Sand <ksand@omwlaw.com>
Cc: Cynthia Moya <CMoya@rentonwa.gov>; Edwards, Scott M. <EdwardsS@lanepowell.com>;
Degginger, Grant <DeggingerG@lanepowell.com>
Subject: Re: TracFone v. Renton: Tax administration rules adopted under RMC 5-26-20
A point of clarification to my formal opinion request -- Ordinance No. 5756, which adopted
Chapter 5-26 RMC, didn't repeal RMC 5-11-2, which at the time imposed a 12% yearly late
payment interest rate for utility taxes only. The utility tax12% yearly interest rate was adopted
by Ordinance No. 5367. which as best as I can tell wasn't repealed until replaced by a new 5-11-
2 by Ordinance No. 5944 in November, 2019.
On Tue, Jun 1, 2021 at 8:42 PM Phil Olbrechts <olbrechtslaw@gmail.com> wrote:
Ms. Sand,
Has the City adopted administrative tax rules under RMC 5-26-20 or adopted any formal
administrative interpretations of the City's tax regulations? I was not able to find any such
documents on-line and can take judicial notice of them for writing my decision. If the tax
department does make administrative interpretations, I'm looking for anything that would
clarify how to resolve the late payment interest conflict between RMC 5-11-2 (which
imposed 12% yearly late payment interest for utility tax until November, 2019 when it was
repealed by Ordinance 5944) and RMC 5-26-11, which as presented at the hearing imposed a
much lower late payment interest rate for most if not all city taxes, includig utility taxes,
starting in 2016. Tracfone is of course also invited to identify any formal administrative
interpretations on the issue as well.
On Thu, May 27, 2021 at 5:31 PM Kari L. Sand <ksand@omwlaw.com> wrote:
Greetings, Examiner Olbrechts and everyone:
Following today’s hearing, I would be remiss if I did not point out that if the Examiner
decides that interest must be computed consistent with RCW 82.32.050, as TracFone
argued, then the penalty must also be computed consistent with RCW 82.32.090(1) and
(2) and would increase from 25% (under the former RMC 5-11-2(A)) to 34% (29% + 5%).
My apologies for not pointing this out before today’s proceedings ended. To avoid any
surprises later, in the event further corrections are warranted, it seemed important to also
note the effect of the RCW on the computation of the penalty amount.
Sincerely,
Kari L. Sand | Attorney
Ogden Murphy Wallace P.L.L.C.
901 Fifth Avenue, Suite 3500 Seattle, WA 98164
Direct: 206.447.2250 | Fax: 206.447.0215
ksand@omwlaw.com | www.omwlaw.com
Take a look at Ogden Murphy Wallace’s new website!
CONFIDENTIAL COMMUNICATION - This communication constitutes an electronic communication within the meaning of the Electronic
Communications
Privacy Act, 18 U.S.C. Section 2510, and its disclosure is strictly limited to the recipient intended by the sender. It may contain information
that is proprietary,
privileged, and/or confidential. If you are not the intended recipient, any disclosure, copying, distribution, or use of any of the contents is
STRICTLY
PROHIBITED. If you have received this message in error, please notify the sender immediately and destroy the original transmission and all
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